Principal Executive Office Background

The Government first created the designation of Principal Executive Office (PEO) when it introduced reform measures for Government Business Enterprises (GBEs) in 1988. The designation of the Chief Executive as a PEO allowed the Board of a GBE to set remuneration for that office. Boards were expected, however, to consult the Remuneration Tribunal before any remuneration changes were implemented.

The Governor-General declared such offices to be PEOs by way of regulations. Subsequently these offices were listed in Part II, Section 3 of theRemuneration Tribunal Act 1973(the Act) as meeting the definition of a 'principal executive office'.

The passage of the Public Employment (Consequential and Transitional) Amendment Bill 1999 subsequently provided for a decentralised wage fixing system for the Australian Public Service, allowing APS employers to negotiate individual employment conditions with employees.

However, remuneration (including some entitlements such as travel, annual leave and compensation for loss of office) for public office holders was still fixed by the central body, the Remuneration Tribunal. In moving to a decentralised remuneration system for some of these office holders, the Government saw the PEO designation as a suitable vehicle to effect the necessary reform measures, with some amendments to strengthen the existing legislative framework.

An office can be designated as a PEO, through a declaration made by the Minister responsible for the administration of the Act (currently the Minister Assisting the Prime Minister for the Public Service). Those offices suitable to become PEOs have been progressively moved into the structure.

Legislation

Definition

The Act defines a 'principal executive office' to include certain named offices (the original GBEs) and 'any other office or appointment declared by the Minister'…' (Section 3).

Role of the Tribunal

To determine, and maintain, a classification structure for PEOs, the terms and conditions, and any other matter significantly related to the classification structure (Sections 5(2A) and 7(3D));

To provide advice to the Minister with responsibility for the Remuneration Tribunal Act (Section 3A(6)) about:

whether an office is suitable to be a PEO;

the Total Remuneration for the PEO;

the appropriate classification Band; and

to make recommendations on any matters relating to PEOs (Section 7(3E)).

Role of the Minister with responsibility for the Remuneration Tribunal Act

Under Sections 3A, 3B and 3C of the Act the Minister may, after taking account of the Tribunal's advice, make the following declarations which will be published in the Commonwealth of Australia Gazette:

an office is to be a PEO;

an office is to be assigned to a specified classification within the classification structure determined by the Tribunal. The assignment may be permanent or temporary (a special case may arise where an office holder receives a personal loading that will apply only to that person and not to successive occupants); and

a specified person, authority or body is to be the employing body.

The Minister may also fix the commencing Total Remuneration for the office by advising the employing body in writing (this is not published in the Gazette).

Role of the Employing Body

Under Section 12C of the Act the employing body for a PEO may determine terms and conditions (including remuneration and allowances) applying to the office, providing that such terms and conditions are not inconsistent with the PEO framework determined by the Tribunal (now contained in Determination 2015/19).

Employing bodies are required to advise the Tribunal of any change to a PEO's terms and conditions, including remuneration, within 4 weeks of the decision. The PEO Notification form is provided to assist Employing bodies to fulfil this requirement.

Conditions

Performance Remuneration

The Tribunal has issued guidelines relating to the performance based payments for PEOs.

Official Travel

The general provisions for domestic and overseas travel by office holders are set out in the Official Travel by Office Holders Determination. The Travel Tier for a PEO is that advised to the Employing Body by the Tribunal. If no advice is provided, offices in Bands A, B and C are eligible for Tier 2 travel and Bands in D and E are eligible for Tier 1.

Travel within Australia - For each of the three travel Tiers, Schedule A of the Official Travel by Office Holders Determination sets out the travelling allowance rates payable for the various Australian cities and towns. There is no payment where the travel does not involve an overnight absence.

Overseas Travel - The Official Travel by Office Holders Determination also provides for overseas meals and incidentals rates to be paid in accordance with the rates published annually by the Australian Taxation Office in its taxation ruling dealing with reasonable travelling allowance amounts. The Taxation Deteminations can be found on the ATO website for the relevant year.

Motor Vehicle Travel - Motor vehicle allowances are also contained in the Official Travel by Office Holders Determination.

Geographic Relocations

The Tribunal has issued a Geographic Relocation Guideline which applies to PEOs who accept appointment to an office in a geographic locality different to their residential location.

Leave

Some provisions applying to leave are set out in the PEO Determination.

Early Loss of Office

The Tribunal has determined a level of financial compensation for a holder of a public office where there is early loss of office (some exclusions apply). Where a term of appointment expires (i.e. there is no early termination) no termination payment is available.

PEO loss of office provisions are set out in the Principal Executive Office Determination.